Haynes International, Inc. (HAYN - Snapshot Report) has been improving each quarter for the past year and the company expects that to continue into fiscal 2011.
This Zacks #1 Rank (Strong Buy) surged to multi-year highs on the last earnings news, but rising growth projections are keeping valuations in check.
Haynes International makes specialized alloys for aerospace, turbine and chemical processing applications.
On Nov 18 Haynes International reported fourth quarter and year end results. Revenues in the final period were up 22% to $105 million. The bottom line was $5.5 million, up from a $3 million loss a year ago.
Earnings per share came in at 45 cents, which was 7 cents better than expected and up from a loss of 25 cents a year ago. Revenue and income rose sequentially in each quarter of fiscal 2010 and Haynes International is looking for that to continue in 2011.
Analysts Love it
Thanks to the strong results and optimistic outlook, the Zacks Consensus Estimate jumped. Estimates for fiscal 2011 are averaging $2.21, up a quarter on the news.
Next year's projections rose 28 cents, to $2.63. Given the 73 cents earned last year, earnings are expected to nearly quadruple over the next 2 years.
Shares of HAYN have pretty good valuations as well. Shares are trading around 19 times this year's estimates, but given the growth rates that is a pretty good deal. The PEG ratio is right at 1.0, a typical benchmark to determine if growth is reasonably priced.
Haynes International's price to sales is 1.3 times, which is in line with its peers.
Thanks to the big earnings surprise shares set a multi-year high and continue to push that level. As long as the estimate picture remains this bullish, there is plenty of reason to think that HAYN will continue higher.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service